Your Tax Obligations
If you declared bankruptcy, you are required to file two income tax returns for the year of the bankruptcy:
- the first for the period from January 1 to the day preceding the date of the bankruptcy; and
- the second for the period from the date of the bankruptcy to the end of the year.
Both of your returns must be filed no later than April 30, 2018 (or June 15, 2018, if you or your spouse carries on a business).
On line 21 of the return, you must enter the date of bankruptcy and indicate which period is covered by the return.
However, before declaring bankruptcy, or even during the bankruptcy process, you can make a payment offer to your creditors (a proposal in bankruptcy or a consumer proposal, as applicable) and thereby change your obligations in their regard.
You are not considered to have declared bankruptcy if you filed a proposal in bankruptcy or a consumer proposal. Therefore, you must file a single income tax return for the entire year.
If you earned income as a self-employed person, you can choose to make QPP contributions on your income from self-employment only in the return for the period following the bankruptcy while taking into account your pensionable earnings for the entire calendar year. To do so:
- Check the appropriate box on line 21 of your return for the period before the bankruptcy.
- Enter the contribution payable on line 445 of your return for the period following the bankruptcy.